Guatemala’s mining industry is key to the country’s economic growth, but lack of regulatory clarity can hamper operations.

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The Ministry of Energy and Mines of Guatemala indicates that in the past ten years, 20 different metals have been mined, including zinc, gold, silver, lead and nickel, making a major contribution to the country’s economy and attracting inward investment.

Current legislation regulating mining exploration and extraction licenses supports implementation of Convention 169 of the International Labor Organisation (ILO).

This recognises the right of surrounding indigenous communities to be consulted on proposed mining projects, and requires the prior, free and informed consent of the local communities affected.

Lack of legal clarity in consultations

While the processes involved in authorising mining projects and consulting local indigenous populations are primarily administrative, many mining companies have been prosecuted and, in some cases, faced judicial sentences for non-compliance. This is because there are no specific regulations that establish how the people affected by this activity should be consulted.

One of the most high-profile cases has been the San Rafael mine in the east of the country, which has had its license suspended since 2017, leaving many workers without employment.

Other judicial cases have ruled that communities be consulted, but mining companies have often been allowed to continue operating.

In practice, there is no legal certainty around consultation, with the authorities often applying different criteria to proposed mining operations, using unclear and constantly changing rules. In effect these are often political decisions.

Legal certainty needed

While Convention 169 is enshrined in Guatemala’s constitution the country still needs to further regulate the associated consultation procedure, so that the state, inhabitants and investors can develop mining projects that are both sustainable and protect the environment.

This would provide legal certainty for those who want to invest, encourage freedom of trade and generate employment that will help to improve the quality of life of local communities.

Moreover, avoiding the need for legal proceedings to grant licenses would encourage more foreign investment, making a vital contribution to Guatemala’s future development.

However, it remains to be seen if these changes will happen

For more information, contact:

Marco Monterroso
Nexia Guatemala
T: (502) 2387 6100 Ext 214

Date: October 2019